How can you protect yourself? First of all, don’t rationalize. Don’t believe that things are different and don’t find reasons to stay in (or get in) against your better judgment.
Second of all, have a plan ahead of time. We are big advocates of the trend following strategy, which involves getting in when a fund moves above its 200-day moving average and getting out as soon as it drops below that mark or 8% off the recent high – whichever comes first.
It’s the only way you can be sure that you’re in while the trend is up, and out soon enough that your gains are protected.
To read more about our trend-following strategy and how to use it, have a look at our special report.
